New Zimbabwe (London)

11 June 2014

Zimbabwe: Mwana Africa Invests U.S $26 Million in BNC Smelter

UK-LISTED Mwana Africa is aiming to have the nickel smelter at its Zimbabwe subsidiary, Bindura Nickel Corporation (BNC), back in operation during the first half of 2015 and contributing to cash flows the following year.

The overall capital cost to execute the restart is estimated to be US$26.5m.

Approximately half of the capital cost will be funded through debt finance, with the remainder to be financed from existing BNC cash flow and company cash balances.

Mwana chief executive Kalaa Mpinga said: "I am pleased to announce completion of the independent study of the accelerated smelter restart plan. This paves the way for us to capitalise on the opportunity presented by a favourable nickel market.

"This study outlines the costs and key milestones required to restart the smelter, and we look forward to updating the market on financing and development of the accelerated smelter restart plan as it evolves over the coming months.

"We can grow our revenue stream by moving rapidly up the value chain from current production and sale of concentrate, with the associated transportation saving cost of this, to production and sale of higher value nickel leach alloy."

Production would begin in the second half of the 2015 calendar year with the operation expected to generate cash flows in 2016.

The decision to reopen the smelter comes as a ban on Indonesian exports in January sent the nickel price northwards.

Although Indonesia is planning new investment in nickel smelters, this will take time to come to fruition and will be expensive.

Said analyst Paul Gait: "Either way, we see normalisation of the nickel price at levels substantially above those seen in 2013 as inevitable".

The restart of the nickel facilities is a result of a strategic review by Mwana Africa - one which hasn't been plain sailing.

Last year the company hired mining veteran Mark Wellesley-Wood to assist on breathing new life into the company's direction only for Wellesley-Wood to leave the company in February.

At the time, Mpinga said there had been a difference of opinion with Wellesley-Wood, but that it did not involve any fallout with a shareholder. "We just found ourselves at odds," he said.

In addition to Bindura Nickel, Mwana Africa operates the 65,000 ounce a year Freda Rebecca gold mine, and has exploration properties in the Democratic Republic of Congo.

Mpinga told Bloomberg News on February 12 it was also considering re-fitting its base metal refinery in Zimbabwe to accommodate platinum group metal refining.

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